Lyft, which competes with Uber for rideshare, reported revenues of $499.7 million in the third-quarter, a 48% drop from the $955.6 million in the same year-ago period. That lackluster result is still a 47% improvement over last quarter when Lyft reported $339.3 million in revenue. That’s good?
Investors were heartened by the improvement and Lyft’s ability to beat analysts revenue expectations of $486.45 million. The company’s net loss of $1.46 per share was worse than expected, but investors appeared more bullish than bearish, buying up Lyft equity and boosting its value after the company’s earnings report.
Lyft’s quarter is a story of year-over-year declines and sequential-quarter gains. On that theme, the company’s active riders fell 44% compared to the year-ago quarter, and rose 44% compared to Q2 2020. Its revenue per active rider fell 7% compared to Q3 2019, but rose 2% from the sequentially preceding period.
Like Uber, Lyft is enjoying patience from investors as it digs its way out from a ride-hailing market pummeled by COVID-19; Uber has enjoyed a delivery business and international operations to buffer its ride revenue declines. Lyft, which is focused on the U.S. market and lacks a delivery program like Uber, has been more impacted by the domestic market.
Rising COVID-19 cases and ratcheting lockdowns could threaten Lyft’s recovery. Still, its core economics are not falling to pieces despite the pandemic. In Q3 2020, Lyft’s contribution margin — a metric that is akin to an adjusted gross margin result — was 49.8%. In the year-ago quarter it was 50.1%.
Lyft will return as long as ride volume recovers. Lyft’s next big hurdle is profitability. The company is still on track to achieve adjusted EBITDA profitability by the fourth quarter of 2021, even with a slower recovery, Logan Green said during the company’s earnings call Tuesday, adding that Lyft is taking an extremely disciplined approach to increase its operating leverage. Lyft is positioned to achieve that profitability goal with about 30% fewer rides than what was required when it originally issued its Q4 2021 profitability target last fall, Green said.
Lyft wrapped Q3 with $2.5 billion in cash and equivalents. Its operations have consumed $1.1 billion in cash so far this year, up around $156 million in the third quarter. At $50 million a month, Lyft has lots of room to get back to more pedestrian losses, and year-over-year growth.